LEIBNIZ INSTITUTE OF AGRICULTURAL DEVELOPMENT IN TRANSITION ECONOMIES Regional Conference Sustainable Land and Water Management in Dryland Ecosystems in Central Asia November 23-24, 2017
Land Reforms in Transition: Kazakhstan s Experience Vasyl Kvartiuk, Martin Petrick IAMO Regional Conference Sustainable Land and Water Management in Dryland Ecosystems in Central Asia November 23-24, 2017 Ashgabat, Turkmenistan
Introduction What was done with the 559 million ha state owned after the collapse of the Soviet Union? o 120 million ha were transfered into private ownership between 1990 and 2000 (Lehrman, 2017); o In many countries, although private ownership is recognized, transferability is limited; o The extent of reforms varies greatly among countries. www.iamo.de 4
Land Tenure in Post-Soviet Countries State ownership Full private ownership CLS and limited private ownership Severely limited private ownership www.iamo.de 5
Introduction The aspirations/goals of liberal land reforms: o Efficiency improvements (easy transferability of land leads to efficient allocations); o Better access to land for the poor; o Possibility to mortgate land. However, transition context is known for: o Transaction costs; o Risks associated with legal uncertainties; o Thin land markets. Land rental markets may provide access to land for skilled undercapitalized farmers (Sadoulet, Murgai & Janvry, 2001; Deininger & Binswanger, 2001). www.iamo.de 6
Introduction Kazakhstan is an interesting natural experiment Legal basis Full CLS Permanent Temporary ownership Short-term Long-term Law on Land Not allowed Unlimited in Unlimited in time, Up to 3 years, Between 3 and 99 1995 time, renting allowed subleasing allowed subleasing allowed years, subleasing allowed Land Code 2003 Allowed Unlimited in Unlimited in time Up to 5 years, Between 5 and 49 time, subleasing (possibility of subleasing not year, subleasing not allowed ownership), allowed not allowed subleasing allowed www.iamo.de 7
Research Questions How did land reforms affect transferability of land and access to land for skilled farmers? Can land rental markets improve efficiency of land allocations? Did the reform improve collaterizability of land for individual farmers and, thus, access to credit? www.iamo.de 8
Theory Modelling farmers decisions to participate in land rental market based on Yao (2000), Vranken & Swinnen (2006), and Deininger & Jin (2005): o Utility maximization framework; o A farm is more likely to rent in if o Marginal productivity of land is high (agricultural ability); o Rental payments and transaction costs are lower; o Land endowment is smaller. www.iamo.de 9
Theory One of main liberal land reform aspirations: using owned/rented land as a collateral for credit access. Credit-rationing framework (Boucher et al. (2009); Petrick, Oshakbaev, & Wandel (2014)) o o o o Quantity rationing (collateral or cash flow constraints); Price rationing (interest rate); Transaction cost rationing (bureaucratic procedures); Risk rationing (riskiness of returns). www.iamo.de 10
Empirical Strategy Data: o Two waves of survey conducted in 2003 by the World Bank and in 2012 by IAMO; o Akmola and Almaty region; o In total 600 households, 341 individual farms and 69 commercial farms were interviewed; o Logit, Tobit models along with descriptive statistics and non-parametric regressions. www.iamo.de 11
Results: Land rental markets Land tenancy across farm types (percentage of farms that owned or rented land) Households Individual Farms Agricultural Enterprises Rented in CLS Owned land/permanent rental Rented in CLS Owned land/permanent rental Rented in CLS Owned land/permanent rental 2002 5.8% 100.0% 5.7% 3.3% 51.7% 8.1% 0.0% 100.0% 14.3% 2011 15.5% 69.4% 2.0% 1.0% 30.3% 27.3% 3.6% 56.4% 60.0% Source: Authors elaboration based on World Bank and IAMO Surveys. www.iamo.de 13
Results: Land rental markets Who do individual farms rent in land from? www.iamo.de 15
Results: Land rental markets Lowess smoothers of the probability of renting in Source: Authors elaboration based on World Bank and IAMO Surveys. www.iamo.de 16
Results: Land rental markets Logit (rent in 1, no 0) Tobit (k ha) AGE (manager s age) 0.003 (0.217) 29.568 (0.239) EDU (manager s education, 1 to 8 scale) 0.043** (0.011) 368.651* (0.053) LAND (owned land, ha) 0.001 (0.228) 23.721** (0.023) LAND 2 0.000* (0.081) 0.000 (0.668) CLS -0.001*** (0.001) -8.022*** (0.001) REGION (Almaty 1, Akmola 0) -0.204*** (0.000) -1947.882*** (0.002) YEAR (2011 1, 2002 0) -0.098* (0.098) 980.864 (0.610) LIVESTOCK (livestock index) 0.001** (0.048) 3.272*** (0.002) TCOSTS (dummy for perceived transaction costs) -0.168*** (0.000) -1064.031** (0.042) YEAR*LAND 0.002 (0.200) 23.721** (0.023) YEAR*CLS -0.001*** (0.000) -8.022*** (0.001) YEAR*EDU 0.047*** (0.008) 368.651* (0.053) YEAR*TCOSTS -0.169*** (0.000) -1064.042** (0.042) Observations 267 267 Note: some variables are omitted due to space limitations www.iamo.de 18
Results: Credit markets Lowess smoothers of a probability of making investments using loans for individual farms. Source: Authors elaboration based on World Bank and IAMO Surveys. www.iamo.de 19
Results: Credit markets Dynamics of perceived credit rationing over a decade. Individual farms No problems Price rationed Transaction costs rationed Quantitiy rationed Risk rationed 0% 10% 20% 30% 40% 50% 2002 2011 Source: Author s elaboration based on World Bank and IAMO Surveys. www.iamo.de 20
Results: Credit markets Making investments using loans by individual farms Logit, Dummy for having made investments (odds ratios) AGE (manager s age) -0.005** (0.031) EDU (manager s education, 1 to 8 scale) 0.012 (0.443) LAND (owned land, ha) -0.006 (0.936) LAND 2 >0.000 (0.547) CLS (ha) >-0.000 (0.766) LAND_RENTED (land rented in, ha) >0.000 (0.153) REGION (Almaty 1, Akmola 0) -0.017 (0.703) YEAR (2011 1, 2002 0) 4.042 (0.934) For households LIVESTOCK (livestock index) land and CLS holdings are positively associated >0.000* (0.046) with the probability of making investments using loans ASSETS (non land assets, bln KZT) >0.000 (0.600) AGRIEDU (special ag. education 1, none 0) -0.003 (0.938) FARMAGE (number of years since establishment) >0.000 (0.912) YEAR*LAND >-0.000 (0.659) YEAR*CLS -0.012 (0.934) YEAR*LAND_RENTED 0.008 (0.454) Observations 267 www.iamo.de 21
Conclusion o Reforms facilitated land flow towards farmers with better skills but did not reduce uncertainty with the property rights; o Skilled individual farmers tend to rent in more land and after the reforms the flow towards better skilled farmers intensified; o Transaction costs of land rental went down substantially but still play a major role in rental decision; o The reforms failed to clearly assign property rights to land and, as a result, they did not improve its collateralizability. www.iamo.de 22
Implications o In transition context land rental markets can have important efficiency and equity implications; o Deeper reforms needed to improve transferability of land and clarity of property rights o Credit markets may need to be stimulated by direct interventions in credit markets. www.iamo.de 23
Land Reforms in Transition: Kazakhstan s Experience Thank you for your attention! Questions? Comments? www.iamo.de 24